GERI provided non-recourse/carve-out guarantees for each of these properties. As the Company has previously disclosed in its SEC filings, such "non-recourse/carve-out" guarantees only impose liability on GERI if certain acts prohibited by the loan documents take place. Liability under these non-recourse/carve-out guarantees may be triggered by the voluntary bankruptcy filings made by the two unaffiliated, individual investor entities. As a consequence of these bankruptcy filings, GERI may become liable under these guarantees and related indemnification obligations for the benefit of the mortgage lender in connection with these TIC programs. While GERI's ultimate liability under these guarantees is uncertain as a result of numerous factors, including, without limitation, the amount of the lender's credit bids at the time of foreclosure, the ultimate disposition of the individual bankruptcy proceedings, and the defenses GERI may raise under the guarantees, such liability may be in an amount in excess of the net worth of NNNRA and its subsidiaries, including GERI. NNNRA and GERI are investigating the facts and circumstances surrounding these events, and the potential liabilities related thereto, and intend to vigorously dispute any imposition of any liability under any such guarantee or indemnity obligation.

In the event that GERI receives a demand for payment from the lenders pursuant to such guarantee and indemnity arrangements, in an amount that exceeds $1,000,000, and GERI fails to pay such amount when due, a cross -default under the Company's currently outstanding Convertible Senior Notes (the "Notes") due 2015 will result. The Company intends to seek an amendment to the Notes (which requires a majority of the holders in interest thereunder) relating to any liabilities of NNNRA or its subsidiaries. Should an event of default occur which the Company is unable to cure with an amendment or waiver from the note holders, there would be a material and adverse effect on the company's liquidity and financial position.

This does not sound good.

Meanwhile, the company reported its Fourth-Quarter and Full-Year 2010 Results. Fourth quarter was yet another quarter of value destruction, this time with a net loss of $10.7 million and EBITDA of negative $4.2 million. For the full year 2010, EBITDA was negative $42 million compared with negative $50 million in 2009. These guys burn some serious cash and destroy serious value!

Tangible equity at year end 2010 was negative ~$150 million! There is no way the equity in this company is worth the $87 million reflected in the market cap.

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